Sunday, November 23, 2008

US Bailing out Citi?!?!?

From the WSJ, although GasPak was out with hints of it earlier today...

This may not be all bad, and it all depends on what their 'mortgage-related assets' really are, but the bad bank-good bank idea that was floating around is likely not good for stakeholders in the long-run in this case. Allowing Citi to take the first 13 - 14% loss on assets and the government coming afterwards, might be a good deal for everyone if the government is receiving a fair insurance premium for their backstop and if Citi's MBS exposure is being hurt more by liquidity than credit.

No comments: